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| A webcomic is introduced on the Kakao Webtoon homepage. Screen capture from Kakao Webtoon's homepage |
By Lee Min-hyung
Lawmakers are set to grill Kakao Entertainment over what the publication industry considers an excessive level of commission fees for a webtoon platform, during the annual National Assembly audit planned for next month.
The entertainment subsidiary of the nation's dominant mobile platform operator is charging creators up to 45 percent commissions from revenue for webtoons and webnovels. The rest of the takings are distributed to the publishing firms and their content creators, which the Assembly's culture committee labels unfair.
The committee decided last week to summon Kakao Entertainment CEO Lee Jin-soo and Naver Webtoon CEO Kim Jun-koo as witnesses for the upcoming audit with a view to looking into whether the two leading online platform operators have abused their excessive influence on the market by signing unfair contracts with content creators and publishers here.
The decision came in response to an escalating controversy over the issue after the Korean Publishers Association stepped up criticism of the two companies. The association argued that Kakao and Naver are "disrupting the ecosystem" of the publication market here and abusing their monopolistic market power.
It urged the government to take stern measures against their apparently and allegedly unfair behaviors. Kim Dong-hoon, head of the nation's webtoon writers' union, will also attend the Assembly audit to comment on the unfair relationship between the two webtoon platform providers and the publication industry.
Kakao Entertainment, however, claims that its commission rates are appropriate, as the company is solely responsible for marketing activities for content published on its platform.
The Kakao subsidiary plans to justify in detail why it has to charge the commission at the upcoming audit, but lawmakers are widely expected to intensify criticism on the leaders of the platform giants amid the government's widening regulatory pressure on the big tech firms.
Kakao Entertainment is not the only subsidiary to have de facto become a target of criticism from the industry. Kakao Pay, a mobile payment platform subsidiary of Kakao, had to suspend its insurance comparison services on Sept. 24 on fears that it may possibly violate the newly introduced Financial Consumer Protection Act.
This is part of widening regulatory pressure from the government and the ruling Democratic Party of Korea (DPK). Lawmakers particularly from the ruling side have recently lashed out at what appear to be the monopolistic market statuses of the two platform operators.
Kakao's excessive business expansion also came under fire from lawmakers. DPK Rep. Song Gap-seok urged Kakao to stop eating away at the existing conventional markets by utilizing its platform power, and instead focus more on making investment in next-generation growth areas.
Amid the intensifying political pressure, Kakao recently shared its plan to establish a social fund worth 300 billion won ($255 million) for co-prosperity over the next five years to help support the self-employed and small business owners here.
But the decision did not draw any favorable responses from the market, due to lingering concerns that the company will continue enhancing its dominant market status by collecting larger commissions from those who run business on its platform.
Kakao founder Kim Beom-su also plans to attend the upcoming audit for the first time in three years after he did so in 2018.
Given the ever-escalating pressure from political circles, Kakao is expected to face additional regulatory hurdles.
Korea Communications Commission Chairman Han Sang-hyuk also called for the introduction of toughened regulations on platform business operators.
A recent poll also showed that seven out of 10 customers here said the legal system here should be revised, as online platform services are unsatisfactory for a number of reasons ― such as weak network systems and excessive private information collection and advertisings ― according to data released by DPK Rep. Cho Seung-rae.
"Digital transformation and technological development are changing the industry landscape in favor of online platforms, but the institutional system has so far failed to catch up with the pace of change," he said.
